Category: State Deficit

Governor Malloy issued a call for a Special Session of the Connecticut General Assembly to deal with the growing state deficit.

That Session is taking place today.

The State Senate and State House or Representatives convened at 10:00 am and then recessed until 4:30 pm so that elected officials could attend funerals and memorial services resulting from the Newtown Elementary School Massacre.

When they reconvene at 4:30 pm, a joint session of the Legislature will be held so Governor Malloy and Legislators can hold their own memorial service in honor of those who lost their lives in Newtown.

And then the legislature is scheduled to debate and vote on a plan to resolve Connecticut’s $415 million budget deficit.

Governor Malloy has already made $123 million in cuts, mostly to social services and Connecticut’s public colleges and universities. The cuts to UConn, Connecticut State University and the Community Colleges come on top of Malloy’s previous cuts to our public institutions of higher education, which were already the deepest in Connecticut history.

As the Hartford Courant noted in today’s edition,” Legislative leaders declined Tuesday to discuss the specifics of the budget deal, which was hammered out in a series of meetings last week

However, as the CTMirror is reporting, the non-partisan Connecticut Center for Economic Analysis, located at the University of Connecticut, has issues a report today noting that balancing the state budget exclusively with spending cuts could be the final straw that breaks Connecticut’s economic back, pushing it back into recession.

In a report about next year’s $1.2 billion deficit, the economists said that an “all-cut” budget could “trigger as many as 25,000 annual job losses between the public and private sectors combined.”

So, when our elected officials vote tonight, what type of budget reduction plan will they be voting on? Will it be all cuts or a combination of cuts and taxes? What programs are being cut and what taxes are being increased?

Will our legislators be voting to cut essential social services?

Will our legislators be voting to ensure that the wealthy finally start paying their fair share in state income taxes?

Will our legislators be voting to borrow money to pay for current expenses?

Will our legislators be voting on a plan that will mean higher local property taxes?

There have been no public hearings on this plan.

The discussions have been held behind closed doors.

According to the House Republican leader, Representative Cafero, the “tentative” agreement, is “truly a compromise.”

After speaking with legislators, the CTNewsjunkie explained that the compromise “means Democrats and Republicans didn’t get everything they wanted as they attempted to reach a deal on how to close the budget deficit estimated at $365 million to $415 million.”

“It relies more heavily on spending cuts than we would have liked,” the Speaker of the House told reporters as he left the closed-door caucus where Democratic legislators were briefed on this secret plan.

The Hartford Courant added, “Lawmakers are set to vote today on a plan to close a state budget deficit by scrapping longevity bonuses for nonunion state workers in favor of a new compensation formula and cutting payments to hospitals, among other measures.”

The state does provide hospitals with funds to help off-set care that the hospitals provide to non-insured people. However, massive cuts to hospitals would definitely threaten the level of services at some hospitals and lead to a major shift in costs from those state grants to those who are insured. That cost shift will translate into higher health insurance premiums for those of us who have insurance. So is the legislature’s vote going to push our health insurance premiums higher? Is that fair?

And cutting out longevity bonuses for non-union workers is certainly understandable, but it solves about 1% of the $400 plus million state budget deficit.

So where are cuts coming from?

While action is definitely needed to bring Connecticut’s budget deficit under control, passing a “plan” that has never seen the light of day is not only incredibly inappropriate, but it is down-right unfair and undemocratic.

This plan, if it looks like the “road-map” proposed by Governor Malloy, will cut deeply into some of the most vital and essential services the state of Connecticut provides our most vulnerable citizens.

Malloy’s budget road map looked like something that would be put out by a Republican governor, not a solution based on the values and ideals of the Democratic Party.

Perhaps the secret plan will be fantastic.

Perhaps the secret plan will be a disaster.

But voting on the plan without telling the media and the people what is in it is bad news for Connecticut.

On December 19, 2012, the 2011-2012 Connecticut General Assembly will meet one more time, this time for a special session to deal with Connecticut’s growing budget deficit.

Call it the Holiday Special Session, or perhaps more aptly, it should be called the, “let’s cut vital human services the week before Christmas” Special Session.

In addition to the $123 million the Governor already cut from this year’s budget using his rescission authority, Malloy has now proposed an additional $220 million in cuts. These cuts, however, would require legislative approval.

The hardest hit agencies are the social services provided by the Department of Social Services, the Department of Children and Families and services aimed at helping those with developmental disabilities or mental illness.

In total, the Governor is seeking to balance the $365 to $415 million deficit with well over $250 million in cuts to what would commonly be called essential social services.

Sheila Amdur, the state’s leading mental health advocate, who presently serves as the interim CEO of the Connecticut Community Providers Association, told the CTMirror that Malloy’s cuts disproportionately hurt those who are not in a position to care for themselves.

Amdur told the CTMirror, “It’s so unconscionable that I’m almost speechless.”

In addition, because the federal government reimburses Connecticut for 50% of its Medicaid social services and health care related expenditures, Malloy’s cuts will actually cost that state over $58 million in lost federal revenue.

On the revenue side, Malloy’s plan includes an additional $22 million in tax revenue, although the Malloy administration was quick to claim that the plan doesn’t call for new taxes.

Malloy’s plan also takes out the state’s credit card and borrows $10 million to pay this year’s installment in the $100 million, 10-year Connecticut Stem Cell Initiative.

By putting the stem cell research on the state’s credit card, rather than paying for it out of the traditional budget, the state can take the $10 million in revenue that was coming from the State’s Tobacco Lawsuit Suit Settlement Fund for stem cell research and put it in the General Fund where it can help cover this year’s deficit.

Considering the state’s credit card already has $19.3 billion on it, another $10 million doesn’t even move the scale, but it is certainly ironic, considering candidate Malloy ran on a platform of never using the state’s credit card for on-going state expenses. (Although to be accurate, this year’s budget already puts tens of millions of on-going expenses on the state credit card).

Even before this latest proposal, Connecticut already ranked #1 in the nation when it comes to state debt per person. While the average state debt per person, across the 50 states, is $1,408 per person, Connecticut’s debt is $5,096 per person and growing.

Finally, Malloy’s budget roadmap “raids” a fund intended for environmental conservation and plans that Connecticut will get nearly $9 million in extra tax money this year as a result of a new “get tough on taxpayers program.”

On Monday, State Comptroller Kevin Lembo, whose office was created in 1786 “to provide accounting and financial services, to administer employee and retiree benefits, to develop accounting policy and exercise accounting oversight, and to prepare financial reports for state, federal and municipal governments and the public” performed his monthly legal duty by releasing what is called his Letter of the First.

The Letter of the First is the legal document that serves as “a monthly analysis of the state’s budget condition that contains the financial statements for the latest month and projections for the budget position to year’s end.”

In that letter, Comptroller Lembo determined that this year’s projected state deficit is $415 million, not the $365 million that the Office of Policy and Management had previously announced.

As required by law, if the State Comptroller determines that there will be a projected deficit of greater than 1 percent of the state budget, the Governor MUST develop and propose a Deficit Mitigation Plan and the Connecticut General Assembly must meet to consider that plan.

According to CTNewsjunkie’ s coverage of developments, “Gov. Dannel P. Malloy wasn’t concerned that state Comptroller Kevin Lembo certified a deficit that was $50 million higher than the one his budget office estimated last month.”

Malloy told reporters, “These numbers are going to go up and down…We’re moving forward with our package, which addresses a set of numbers.”

But of course, under the law, it is totally irrelevant what Malloy and his budget office think. If the State Comptroller certifies that there will be deficit of greater than 1 percent, the Governor has the legal obligation to propose a solution to address that deficit.

According to CTNewsjunkie, Governor Malloy then went on to say, “The comptroller thinks we will spend more money than we did — he may be right…I was told similar predictions were made last year and they didn’t turn out to be right, so we’re dealing with the numbers we believe currently represent that challenge.”

Malloy’s suggestion that Lembo has been wrong in the past is off-base, but even more importantly, as was just noted, IF the individual who is legally responsible for being the state’s fiscal watchdog says the projected deficit is $415 million, then the “correct” number is $415 million…not “the numbers we believe currently represent the challenge”.

Finally, the Governor summarized the situation by saying, “We’re going to continue going down the path of dealing with it in a forthright, fair, and transparent manner.”

Ah, okay…

So just so we all have the same set of facts…

In the days leading up to this year’s election, the Malloy administration maintained their claim that the budget deficit was not more than $60 million.

Then in the course of two weeks it jumped to $128 million and then $365 million.

And just last week, when Malloy announced his $160 million in “budget cuts,” it turned out that he was double counting more than $40 million of those cuts and his action really reduced state spending by $123 million.

One can say a lot of things about the way the Malloy administration are handling the ongoing budget crisis, but “forthright, fair, and transparent” sure isn’t one of them.

You can find CTNewsjunkie’s story here: http://www.ctnewsjunkie.com/ctnj.php/archives/entry/malloy_not_concerned_about_higher_deficit/

“Comptroller Kevin Lembo today announced that the state is currently on track to end Fiscal Year 2013 with a deficit of at least $415 million based on current spending patterns and revenue projections.”

Although just last week, Ben Barnes, Malloy’s budget chief, continued to maintain that the deficit was $365 million, State Comptroller Lembo has set the record straight. It is $50 million higher than the Malloy administration has admitted and continues to grow larger.

According to Lembo’s press release, “Statewide agency appropriations projected to year end are running above their appropriated levels even after consideration of OPM’s estimated deficiency appropriations…Medicaid – the largest single gross appropriation line-item in the budget – is significantly above the budget target.

To translate that into common speech, even as late as last week, the Malloy Administration was finding it impossible to tell the truth.

When putting together the budget, the Malloy Administration underestimated what the state would need to cover Medicaid expenses. In addition, the Malloy Administration claimed it would achieve savings it never achieved and finally, the poor economy has meant that the number of Medicaid cases as grown. As of now, Malloy’s Medicaid budget missed the mark by more than a quarter of a billion dollars.

Incredibly, even now, Malloy and his handlers refuse to come clean with the Connecticut media or the public.

Check back later for updates from the Connecticut media as they become available.

When Governor Malloy proposed this year’s budget, the General Assembly passed it, and the Governor signed it into law, it was widely understood that the Malloy Administration had purposely underestimated the true costs of funding various programs, especially within the Department of Social Services.

Almost immediately, State Comptroller Kevin Lembo started warning the Malloy Administration that spending on social services would exceed what was authorized in the state budget.

Eventually, Ben Barnes, the Secretary of the Office of Policy and Management, admitted that the state might spend as much as $100 million more than authorized on these programs.

When the truth finally came out last week, the projected spending level is at least $191 million more than budgeted, although the federal government will reimburse the state for 50 percent of that amount.

This week, details about the $191 million in excess Medicaid spending were finally provided. The overspending includes;

$62.5 million in Acute Care Services (hospitalization)

$46.1 million in Professional Medical Care (doctors)

$25.9 million in Other Medical Services (lab work, treatment, medical supplies and equipment)

$13.0 million in Home and Community Based Services

$39.6 million in Nursing Home Facilities

$2.8 million in other Long Term Care

$1.0 million in Administration and Adjustments

In addition to the “optimistic assumptions,” there has been an increase in caseload, although the Malloy Administration’s attempt to blame the problem on increasing caseload is more than a bit disingenuous.

According to estimates from the independent Office of Fiscal Analysis, the number of Low Income Adults seeking services has grown by about 4,000 clients since the beginning of the fiscal year in July, a 5.0% increase. These additional clients represent an additional cost to the state of about $30.0 million.

In addition, the Malloy Administration had proposed a number of initiatives to reduce spending on Medicaid this year, most of which have yet to be implemented.

As part of Governor Malloy’s $132 million in cuts that he proposed yesterday, the Department of Social Services was hit for about $32 million. These cuts will force significant reductions in a variety of vital services starting in December and January.

Some of the more significant program cuts include the following;

Children’s Trust Fund $657,000

Husky B Insurance Program $1.5 million

Old Age Assistance $1.5 million

Aid to the Disabled $964,000

Temporary Assistance to Family (TANF) $5.3 million

Connecticut Home Care Program $2.3 million

Child Care Services (which is the child care subsidy for low-income WORKING PARENTS) $2.3 million *

*So, the cut could actually cost the state money if parents are forced to quit to take care of children

Housing/Homeless Services $2.9 million

Furthermore, the largest cut to the Department of Social Services is being made to the grant program to Connecticut hospitals to help them cover their uncompensated care. Malloy’s cut to these hospitals is for $13.4 million, which will certainly lead to health insurance premiums going up as hospitals try to stay in business by shifting even more costs to self-pay patients and those who are insured.

The hands down leader for the most absurdly incredible budget comment of the year, at least to date, doesn’t go to Malloy or Occhiogrosso, albeit they have had some pretty good ones, but to Ben Barnes, Malloy’s budget chief.

When Barnes spoke to Connecticut legislators earlier this week about this year’s $365 million budget deficit and next year’s projected $1.1 billion shortfall, legislators also asked him about the impending and monstrous “spending cap” problem that Connecticut is facing.

Barnes said that if Connecticut did not exceed the spending cap, the projected deficits would actually be surpluses.

Although this year’s budget is “projected” to be $5.9 million below the spending cap (3 one hundredth of one percent), next year’s current service budget will be $600 million over the spending cap and the year after that, the budget will exceed the spending cap by $1.2 billion. In FY16, the Connecticut budget, as of now, would be $1.3 billion over the spending cap.

What Barnes was really saying was that IF Connecticut cut funding by well over a billion dollars, our deficits would become surpluses. While reasonable people can disagree about the amount of cuts that can be adopted, there is no rational observer who would suggest that the Connecticut budget can be cut by $1 billion.

To put the issue into perspective, between his budget cuts and the Malloy-SEBAC state employee agreement, the Malloy administration reduced state spending this year by $400 – $600 million, depending on how generous one wants to be with the numbers. The vast majority of those savings came via the state employee concession package.

The ability to now cut an additional $1 billion, with the employee agreement now locked into place, is impossible.

It would have been easier to have won the recent $500 million lotto – and even that amount wouldn’t have solved Connecticut’s problem.

There are those who will say that the Great Recession is over and the economy is getting “better,” but Connecticut’s fiscal crisis is very real and is actually getting worse.

In addition the revenue and expenditures issues, Connecticut’s flawed Spending Cap will finally have to be addressed.

Instead of refusing to step up to the challenge and explain the truth to Connecticut’s legislators, Ben Barnes, Malloy’s Secretary of the Office of Policy and Management, steadfastly remained committed to misleading legislators and the public.

Hartford…We have a major problem here and the Malloy Administration is making it significantly worse by failing to tell the truth.

Or in this case – When Governor Malloy and his administration seek to mislead Connecticut’s media and citizens about his cuts to the Connecticut state budget.

The Facts:

Connecticut State Government is facing a $365 million budget deficit this year and a projected $1.1 billion dollar shortfall next year.

Yesterday, the Malloy administration released a list of $170 million in cuts that Governor Malloy had ordered. Malloy’s Budget Chief, Ben Barnes, along with Malloy’s chief advisor then spoke to the media about the cuts the Governor was making. .

While it was true that the Malloy administration released a list of $170 million in cuts, it turns out that $47 million of those cuts were budget reductions that Malloy had already implemented and, thus, had no impact on the $365 million deficit.

When the Connecticut General Assembly adopted, and the Governor signed, this year’s $19.1 billion dollar budget, it was “balanced” by a requirement that the Governor “hold back” $136.3 million in spending. In budget language this is called a required lapse. Think of it this way. Your young child asks that their allowance be raised from $9 to $10 a week. You agree that they can have $10 a week, but they must start each week by giving you $1. They agree. They think, or at least can tell their friends that they get $10 a week, when in fact they still only get $9.

Legally, the Governor must hold back those funds. Of the $170 million Malloy announced, $47 million was already part of that lapse, meaning those cuts have absolutely no impact on the magnitude of the present deficit.

Now some of you readers may be surprised, but the administration that claims to be the most transparent in history failed to inform the media that their list of $170 million in cuts actually only cut the budget by $123 million.

Of those “real” cuts, about $70 million was taken out of vital health care and social service programs, while another $25 million was cut from Connecticut’s public colleges, universities and student financial aid. And that was student financial aid that thousands of students were expecting to receive this coming January.

The actual document the Malloy administration released failed to note the fact that nearly 30% of the savings was achieved by double counting cuts that had already been made.

Furthermore, neither Malloy’s budget chief nor his chief adviser took the trouble to tell the media the truth during their press conference.

That is why all the media outlets ran with headlines and stories that were inaccurate.

There are a number of excellent stories about the impact the cuts will have. Just click on the headlines in the text above.

Today’s double barreled lesson; (1) There is always room for one more Director of Communications on the ship of state, even in the face of a billion dollar deficit, and (2) there are simply no qualified PR people in Connecticut.

Last week came the news that UConn President Herbst had to go all the way to Iowa to get her $227,000 PR person.

Today comes news that Stefan Pryor, Governor Malloy’s Commissioner of Education, is bringing in yet another out-of-state person to help him run Connecticut’s Department of Education.

This time it is a new Communications Director, the third he has had since becoming Commissioner about a year ago. The first was filling in on a temporary basis and has since returned to his job in the Department of Education. The second has been transferred to a new task at the Education agency and now Kelly Donnelly will be coming on board at the end of this week.

Although Donnelly apparently has absolutely no background in public education or education policy, she is an experienced political operative, having worked on numerous political campaigns in New Jersey and New York.

Since 2007, the 2002 graduate of Notre Dame worked as a campaign manager for a state assembly race in New Jersey, a city council candidate in Brooklyn, New York, a congressional candidate on Long Island and as a field organizer in Jim Keane’s 2007 gubernatorial campaign in New Jersey.

According to the social networking site, LinkedIn, her most recent job was a six month stint as the Deputy Communications Director for The New Jersey Democratic Legislative Majority, which was a political committee formed by the New Jersey Senate Democratic Majority and the New Jersey Democratic Assembly Campaign Committees.

From 2009 to 2011, Donnelly served as project manager for a California solar energy company where she oversaw residential and commercial photovoltaic (solar system) installations.

The salary level for the new State Department of Education’s Director of Communication was not immediately available, so check back for that number at a later date.

Republican legislators wanted to know if the Malloy Administration was going on record saying that the Governor would not propose any tax increases to address the growing state deficit.

OPM Secretary Barnes responded with phrases like, “I have no intention” of raising taxes, but added, “I’m not going to make an absolute promise…”

Barnes also side-stepped questions related to what the CTMirror described as “a myriad of other revenue-raising scenarios that some might argue are equal to a tax increase.”

Thanks to President Bush #1, the concept of “No New Taxes” is indelibly ingrained in the American political lexicon.

But of course, at least one of the elephants in the room is the major tax increase that is already built into the Connecticut state budget.

As the result of the upcoming increase in the state’s wholesale tax on petroleum, the price of a gallon of gas will go up 4 to 8 cents on July 1st, in addition whatever other prices increases are coming as a result of “market pressures.”

Why?

Connecticut has two gas taxes. In addition to the standard gasoline tax of 25 cents that is collected at the gas pump, Connecticut drivers are paying another 22 cents a gallon due to the state’s wholesale petroleum tax, which is collected when the gasoline arrives at the wholesaler.

Under present law, the state collects an effective tax rate of 7.53 percent on the wholesale price of gasoline.

Last year, the legislature placed a one year cap on that tax so that it would not exceed 22.6 cents.

However, the wording of the existing state statute is that the cap comes off on July 1, 2013 and the tax rate increases to 8.81 percent.

At today’s prices, this will boost the price of a gallon of gas by about 4 cents. If gas prices return to their previously high levels, the tax would add as much as 8 cents to the price of a gallon of gas.

This 17 percent increase in the petroleum gross receipts tax will bring in about $50 million at today’s gas prices.

Back in 2005, when Connecticut adopted its present transportation infrastructure initiative, the original tax increases in the wholesale tax were sold as part of the mechanism to fund the transportation improvements.

Since then, the wholesale tax increases in 2005, 2006 and 2007 have brought in close to $2 billion dollars. However, about 60 percent of that money has been used for general fund expenses rather than transportation related costs.

Considering the magnitude of the budget deficit facing Connecticut, and Governor Malloy’s previous efforts to reduce expenditures for transportation initiatives, taxpayers can certainly expect that the additional $50 million the July 2013 increase will bring in will be used to cover the deficit rather than for its intended purpose.

Last week came the news, via Kathy Megan at the Hartford Courant, “The University of Connecticut has hired a new vice president of communications at an annual salary of $227,500.”

Okay, so some people were upset because with 171,000 Connecticut unemployed residents, not to mention the thousands of highly trained public relations professionals who work and live in Connecticut, UConn’s President wasn’t able to find a single qualified candidate for this new position and had to go out of state to hire her new communications person.

But the good news is that Connecticut’s taxpayers don’t have to pick up the tab for President Herbst’s new assistant.

But $227,000 plus benefits (which, thanks to the CTMirror we now know is more than the national average).

Not that long ago, the person who worked as UConn’s top PR guy was called the Director of Communications. A promotion changed his job title to Assistant Vice President, then Associate Vice President and now President Susan Herbst has decided to grant the next guy the title of Vice President.

The long-time state employee, who was doing the job before, retired in 2009 with a salary in the range of $225,000. He now collects a lifetime state pension of $114,000 (going up each year thanks to a cost of living adjustments.)

The next guy picked up the title of associate vice president and his salary jumped from $180,000 in 2010 to $203,000 in 2011.

Of course, in both cases, those amounts only reflect the base salary. When you add in the cost of benefits, including health insurance, pension, etc., you increase the person’s total compensation package by about $45,000 or so.

Officially, the salary and compensation package for the outgoing associate vice president was $248,866.70 in 2011.

Now along comes Tysen Kendig, who will be leaving the University of Iowa, to join UConn as vice president for strategic communication. His salary of $227,000 will be augmented by about $50,000 in benefits, putting him on the first rung of the ladder with a total compensation package of just over $275,000.

But before taxpayer’s start to yelp…you can rest assured that the burden for these growing costs will be paid for by UConn’s parents and students through tuition and fees and not by taxpayers.

Over the last 20 years, the State of Connecticut has been covering a smaller and smaller portion of the costs associated with running the University of Connecticut.

Back in the “old days,” when I was a state legislator, the state picked up about half the costs associated with UConn’s budget. When Governor Malloy was done implementing the deepest cuts in Connecticut history to our public colleges and universities, the state’s share has dropped to 27 percent of the UConn Budget.

Now, about 73 percent of the money needed to run the University of Connecticut comes from tuition, fees, with smaller amounts coming from federal grants and some private fundraising.

This year, the State of Connecticut will send about $280.3 million in taxpayer funds to help cover the costs of running UConn.

However, UConn spends $565 million to pay the salary and benefits associated with the teachers, professionals and support staff that run the day to day operations of the $1 billion enterprise known as the University of Connecticut.

So when Susan Herbst and the UConn Board of Trustees decide that UConn needed a new $275,000 Vice President, the cost is NOT coming from taxpayers but from parents and students, who are already struggling to meet record high tuition costs.

FOOTNOTE: And for those left scratching their heads about this year’s $365 million deficit and the $1.1 billion shortfall next year, these key employment decisions must be approved by the UConn Board of Trustees. Not only does the Governor appoint the Chairman and the majority of the members of the Board of Trustees, but Malloy’s Commissioners of Education, Agriculture and Economic Development are automatically members of the UConn Board. Even more importantly, under Connecticut law, the Governor actually serves as the President of the Board of Trustees and has a personal representative attend all board meetings.

In fact, of the hundreds of boards and commissions in Connecticut, a sitting Governor has more control over the UConn Board of Trustees than he or she has over virtually any other government entity.